Bitcoin Surges Past $78,000 on Renewed Institutional Demand and Easing Yield Expectations

Bitcoin experienced a dramatic surge, breaking the $78,000 mark for the first time since late May. This significant climb, exceeding 8% on Friday and pushing weekly gains past 20%, was attributed to a confluence of factors. A key driver was the strengthening institutional demand, evidenced by substantial inflows into spot Bitcoin ETFs. On August 20 alone, these ETFs attracted $606 million in net inflows, extending a positive streak to four days. Spot Ethereum ETFs also saw a healthy $221 million inflow on the same day.

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The strengthening of institutional demand was reflected in the money flowing into exchange-traded funds (ETFs).

The rally was also significantly boosted by the forced liquidation of short positions. Over the past 24 hours, approximately $1.4 billion in cryptocurrency positions were liquidated, with short trades accounting for $1.2 billion. This followed a massive $3 billion in short positions closed the previous day, bringing the two-day total to over $4 billion. These forced buybacks amplified Bitcoin's upward momentum.

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The acceleration of institutional fund flows showed that the rise in Bitcoin was supported not only by liquidations in leveraged trading but also by a real increase in demand in the spot market.

Further support came from the U.S. Treasury's decision to double the size of its long-term bond buybacks to $4 billion per operation. This move fueled expectations of easing financial conditions and boosted global risk appetite. Analysts suggest that the U.S. national debt, nearing $40 trillion, also contributes to Bitcoin demand, as rising debt servicing costs could pressure the U.S. dollar and strengthen the case for Bitcoin as a hedge against inflation and currency devaluation.

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The U.S. Treasury's announcement that it would increase the size of its long-term bond buybacks from $2 billion to $4 billion per operation.